Sah Polymers Ltd IPO gets 45% anchor allocated

Sah Polymers IPO anchor issue saw a robust response on 29 December 2022 with 45% of the IPO size getting absorbed by the anchors. Out of the 1,02,00,000 shares on offer, the anchors picked up 45,90,000 shares accounting for 45% of the total IPO size. The anchor placement reporting was made to the BSE late on Thursday, 29th December 2022. The IPO of Sah Polymers Ltd opens on 30th December 2022 in the price band of Rs. 61 to Rs. 65 and will close for subscription on 04th January 2023 (both days inclusive). The basis of allotment will be finalized on 09th January 2023, while the refunds will be initiated to non-allottees on 10th January 2023. The demat credits to allottees are expected to happen on 11th January 2023 while the stock will be listed on the bourses on 12th January 2023. The entire anchor allocation was made at the upper price band of Rs65 per share. Let us focus on the anchor allotment portion ahead of the Sah Polymers Ltd IPO.

Before we go into the details of the actual anchor allotment, a quick word on the process of anchor placement. The anchor placement ahead of an IPO/FPO is different from a pre-IPO placement in that the anchor allocation has a lock-in period of just one month, although under the new rules, part of the anchor portion will be locked in for 3 months. It is just to give confidence to investors that the issue is backed by large established institutions.

However, the anchor investors cannot be allotted shares at a discount to the IPO price. This is explicitly stated in the SEBI revised regulations as under, “As per the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirement) Regulations, 2018, as amended, in case the Offer Price discovered through book building process is higher than the Anchor Investor Allocation Price, then the Anchor investors will be required to pay the difference by the pay-in as specified in the revised CAN.

An anchor investor in an IPO is normally a qualified institutional buyer (QIB) like a foreign portfolio investor or mutual fund or insurance company or a sovereign fund which invests before the IPO is made available to the public as per SEBI regulations. Anchor portion is part of the public issue, so the IPO portion to the public (QIB portion) is reduced to that extent. As initial investors, these anchors make the IPO process more attractive for investors, and instil confidence in them. Anchor investors also largely aid in price discovery of the IPO

Anchor placement story of Sah Polymers Ltd

On 29th December 2022, Sah Polymers Ltd completed the bidding for its anchor allocation. There was an enthusiastic response as the anchor investors participated through the process of book building. A total of 45,90,000 shares were allotted to a total of 3 anchor investors. The allocation was done at the upper IPO price band of Rs. 65 which resulted in an overall allocation of Rs. 29.84 crore. The anchors have already absorbed 45% of the total issue size of Rs. 66.30 crore, which is indicative of the robust institutional demand.

Listed below are the 3 anchor investors who got allotted the entire anchor allocation of shares across them. The entire anchor allocation of Rs. 29.84 crore was spread across these 3 major anchor investors only. These 3 anchors mentioned in the table below, accounted for the full 100% anchor allocation on 29th December 2022.

Data Source: BSE Filings

While the GMP has remained stable at around Rs. 6, it shows an attractive but relatively subdued premium of 9-10% on listing. However, it must be said that the anchor response has been extremely good with the anchors taking in 45% of the total issue size. The QIB portion in the IPO will be reduced to the extent of the anchor placement done above. Only the balance amount will be available for QIB allocation as part of the regular IPO.

The general norm is that, in anchor placements, smaller issues find it hard to get FPIs interested while larger issues do not interest mutual funds. Sah Polymers Ltd has not got any allocation from the domestic mutual funds or from the insurance companies. Considering the size of the issue, the entire anchor portion has been absorbed by just 3 funds, which account for the entire anchor portion in the case of Sah Polymers Ltd.

Out of the total 45,90,000 shares allotted by way of anchor placement, Sah Polymers Ltd has not made any allotment to the domestic mutual funds. The price of Rs. 65 at the upper band of the IPO includes the par value of Rs. 10 and premium of Rs. 55 per share.